Detroit Is In Utter Shambles And The State Should Take It Over Immediately

Detroit Mayor Dave Bing is
upset about a possible takeover by the state. Bing says "We know
what needs to be done, and we stand ready to do it."

I have a simple suggestion for Bing don't "stand ready to do it,
just do it". Indeed he
has had years to "just do it" yet hasn't done it.

Please consider Detroit in a hostile takeover bid?

The idea is extreme, even in a city accustomed to fighting for
survival: Should the state of Michigan step in to run
Detroit?

The governor has taken steps in that direction, proposing an
unprecedented move that could give an appointed manager virtually
unchecked power to gut union contracts, cut employee health
insurance and slash services. But city leaders bristle at the
notion. Said the mayor: "This is our city. Detroit needs to be
run by Detroiters."

If it happens, Detroit would be the largest American city ever
taken over by a state. Michigan has seized control of smaller
struggling cities, but until now Detroit was always
off-limits.

That changed this week, when Republican Gov. Rick Snyder's
administration said it would begin a review of Detroit's
precarious finances. If the governor concludes that the city's
economic situation constitutes an emergency, he could dispatch a
manager who could push the mayor and city council to the
sidelines.

Democratic Mayor Dave Bing says Detroit doesn't need the help. He
insists the city is reducing a $150 million budget deficit and
easing cash-flow problems on its own.

"We know what needs to be done, and we stand ready to do it," an
indignant Bing said.

"It terms of a city, I think Detroit stands alone," said Michael
LaFaive, director of fiscal policy at Michigan's Mackinac Center
for Public Policy, a nonpartisan group that espouses free
markets.

An emergency financial manager would have the power to privatize
utility departments, as well as the bus system and other
agencies. A manager also could sell off city-owned parking lots
and even Belle Isle, Detroit's popular island park, LaFaive
said.

In a 2001 report, LaFaive wrote about Detroit's burgeoning fiscal
problems and recommended privatization, contracting out services
and ways to generate revenue.

"I think they knew what the recommendations were, but their hands
were tied a bit by recalcitrant employee unions," LaFaive said.
"Those kinds of bold reforms would be difficult to get over with
the city council or voters, in general."

Last month, Bing declared the city government "broken" and said
the public's checkbook would be short by $45 million next year
unless Detroit starts saving money fast. In an attempt to ward
off an emergency manager, he proposed laying off 1,000 employees
— 9 percent of the workforce — and negotiating 10 percent pay
cuts with unions.

Bing Hasn't Done It Because He Can't

Union rules and contracts prevent Bing from doing what needs to
be done. Moreover, I doubt he would do it even if he could.

Last month Bing declared city government
"broken".

Sheeesh. Detroit has been broken and bankrupt for years, decades
probably, but certainly for the entire time Bing has been
mayor.

I have written about Detroit on many occasions.

June 12, 2009: Median Home Prices In Detroit Fall To
$6,000

Although I am a deflationist, I must admit surprise that the
median home price in Detroit has fallen to a stunningly low
$6,000.

July 11, 2009: Detroit Public School System Ponders
Bankruptcy

Freep is reporting the Detroit Public School
System May Wind Up In Bankruptcy.

July 24, 2009: Detroit Heads For Bankruptcy; 50 Cities
Must "Shrink to Survive"

For Detroit, as with GM, bankruptcy
has always been a question of when, not if. Detroit's time is
nearly up even as Mayor Dave Bing says I’m fighting to keep city
from going broke.

April 6, 2010: Detroit Bankruptcy Looms with Deficit of
$446 Million in Budget of $1.6 Billion

Detroit has hit the end of the line. It's budget deficit is
between $446 million and $466 million (28% to 29%) of $1.6
billion with few ways other than drastic cuts in wages and
benefits to address the problem. If unions will not give in (and
they won't), Detroit Faces Bankruptcy.

December 13, 2010: Detroit Mayor Plans to Halt Garbage
Pickup, Police Patrols in 20% of City

Detroit has been bankrupt for years. It simply refuses to admit
it. Detroit's schools are bankrupt as well. A mere 25% of
students graduate from high school.

Yet, in spite of hints and threats from mayors and budget
commissions, and in spite of common sense talk of bankruptcy,
Detroit has not pulled the bankruptcy trigger.

In a futile attempt to stave off the inevitable one last time,
Mayor Bing's latest plan is to cutoff city services including
road repairs, police patrols, street lights, and garbage
collection in 20% of Detroit.

Bing to Cede 20% of Detroit to Gangs and
Homeless

City officials suggest this will not shrink the size of the city.
Perhaps it won't shrink Detroit on Google
Maps. However, Bing's plan would effectively surrender 20% of
the city to gangs and the homeless.

Would you want to live in one of the gang war-zones that his plan
would create? Would you want to live in a bordering neighborhood
or in a bordering city?

Regardless of your answer, Bing's plan cannot and will not work
and I believe Detroit will, sometime in 2011, file for
bankruptcy.

Repurpose or Abandon?

Of course the Mayor's office did not say they would abandon
sections of the city to gangs. But how the hell can repurposing
as described above possibly mean anything else?